How to Buy Stocks With E*TRADE

Calculate and Compare Investments Carefully

E*Trade provides a full range of brokerage activities under an easy-to-use format capable of use from any place with an Internet connection. Fees are reasonable for an on-line brokerage, compared to using a full-service broker. Bonds, stocks and option trading are available, just as are employee stock plans and Individual Retirement Accounts, Roth Accounts and individually managed accounts.

Things You'll Need

• Internet access
• Money transfer facilities to open the account

Instructions

Open the E*Trade Account for Stocks and Options

1. 

   Complete the online application and fund it immediately through electronic transfer, wire transfer or check. Apply for the Quicktrade option so that monies can be withdrawn through unlimited check or free ATM usage.
   Open a margin account so covered calls and option trades can be traded. Make certain you understand the services available.
   Money management for a fee is available for beginning traders.
   Choose basic services if you wish to trade for yourself.

2. 

   Understand the fee schedule. Currently E*Trade charges from $6.99 to $12.99 per trade. The lower fees are for power traders or those traders generating 1,500 trades every quarter (6,000 trades per year or about 25 trades per trading day).
   Other prices are for reduced trading levels and the total amount of assets under management.
   Active day traders with several hundred thousand dollars to trade might approach the cheaper levels, but with stock exchange fees and the cheaper fee, the 1,500 trades implies fees of more than $11,000 per quarter. Day trading requires a high percentage of success to cover fixed brokerage costs.
   Bond purchases have a $10 minimum for secondary transactions of corporate, municipal and treasury securities.

3. Trading is available worldwide on a 24/7 basis with streaming (live) quotes and historical trading records. Use the free available charting and graphing tools if your investment strategy is to use a technical approach to trading. Free research materials and reports are available from reputable sources. Before trading, always back-test trading ideas on historical data.

4. Remember to use the E*Trade stop function to limit losses and learn to use the conditional function if you are attempting covered call strategies or to establish a simultaneous long and short position. Trading should be a business with a fully rehearsed plan. E*Trade provides many important tools for limiting risk in bond, stock and equity trading. Always write down your intended trade on paper and enter your trade from your paper, not from memory.
   If you make a mistaken trade, you are liable for the consequences. E*Trade will have a record of every keystroke made during order entry.

5. Enter your trade carefully and review it one last time before confirming the trade. Study your trade immediately after it occurred to correct any errors. Study your trading record as you develop trading proficiency. Almost all trading is by electronic matching so results should appear almost immediately. Investigate the web seminars and on-line trading classes available to learn to customize your preferences and employ new trading strategies.

Tips & Warnings

• E*Trade is easy and customizable and is all inclusive and complete. It offers most of the same full-service products available at major brokerages at lower cost.

• Always practice trade before investing real money in the marketplace. The learning curve is steep and expensive.

Resources

• Business News and Trading Links
• E*Trade hoempage